Page 625 - untitled

596 Notes to Chapter 12

64. Attorney General of Massachusetts, “Attorney General Martha Coakley and Goldman Sachs
Reach Settlement Regarding Subprime Lending Issues,” May 11, 2009; “Morgan Stanley to Pay $102 Mil-
lion for Role in Massachusetts Subprime Mortgage Meltdown under Settlement with AG Coakley’s Of-
fice,” June 24, 2010.
65. Complaint, Cambridge Place v. Morgan Stanley et al., No. 10-2741 (Mass. Super. Ct. filed July 9,
2010), p. 28.
66. Sarah Johnson, “How Far Can Fair Value Go?” CFO.com, May 6, 2008.
67. Vikas Shilpiekandula and Olga Gorodetsky, “Who Owns Residential Credit Risk?” Lehman Broth-
ers Fixed Income, U.S. Securitized Products Research, September 7, 2007.
68. Moody’s Investor Service, “Default & Loss Rates of Structured Finance Securities: 1993–2009,”
Special Comment, September 24, 2010.
69. Ben Bernanke, closed-door session with the FCIC, November 17, 2009.
70. Vikas Shilpiekandula and Olga Gorodetsky, “Who Owns Residential Credit Risk?,” September 7,
2007, p. 1. The Lehman analysts pegged ultimate subprime and Alt-A losses at $200 billion. Those fore-
casts were based, the analysts said, on a scenario in which house prices fell an average of 30% across the
country. For the securitization figures, see Inside Mortgage Finance, The 2009 Mortgage Market Statisti-
cal Annual, vol. 2, The Secondary Market.
71. IMF, “Financial Stress and Deleveraging: Macro-Financial Implications and Policy,” Global Finan-
cial Stability Report, October 2008, p. 78; IMF, “Containing Systemic Risks and Restoring Financial
Soundness,” Global Financial Stability Report, April 2008.
72. FCIC staff estimates, based on Moody’s Investor Service, “Default & Loss Rates of Structured Fi-
nance Securities: 1993–2009,” Special Comment, September 24, 2010, and analysis of Moody’s Structured
Finance Default Risk Service.
73. Ben Bernanke, testimony before the FCIC, Hearing on Too Big to Fail: Expectations and Impact of
Extraordinary Government Intervention and the Role of Systemic Risk in the Financial Crisis, day 2, ses-
sion 1: The Federal Reserve, September 2, 2010, transcript, p. 54.
Chapter 12
1. FCIC staff calculations using data in worksheets Markit ABX.HE. 06-1 prices and ABX.HE. 06-2
prices, produced by Markit; Nomura Fixed Income Research, CDO/CDS Update 12/18/06. The figures re-
fer to the BBB- index of the ABX.HE. 06-2.
2. Nomura Fixed Income Research, CDO/CDS Update 12/18/06, p. 2.
3. SEC, “Risk Management Reviews of Consolidated Supervised Entities,” internal memo to Erik Sirri
and others, January 4, 2007.
4. Jim Chanos, interview by FCIC, October 5, 2010.
5. SEC, “Risk Management Reviews of Consolidated Supervised Entities,” memo, January 4, 2007.
6. Fed Chairman Ben S. Bernanke, “The Economic Outlook,” testimony before the Joint Economic
Committee, U.S. Congress, 110th Cong., 1st sess., March 28, 2007.
7. Henry Paulson, quoted in Julie Haviv, “Bernanke Allays Subprime Fears as Beazer Faces Probe,”
Reuters, March 28, 2007.
8. David Viniar, written testimony, Wall Street and the Financial Crisis: The Role of Investment Banks,
Senate Permanent Subcommittee on Investigation, 111th Cong., 2nd sess., April 27, 2010, pp. 3–4.
9. Michael Dinias, email to David Viniar and Craig Broderick, December 13, 2006, Senate Permanent
Subcommittee on Investigations, Exhibit 2.
10. Viniar, written testimony, Permanent Subcommittee on Investigation, pp. 3–4; Daniel Sparks,
email to Tom Montag and Richard Ruzika, December 14, 2006, Senate Permanent Subcommittee on In-
vestigations, Exhibit 3.
11. Kevin Gasvoda, email to Genevieve Nestor and others, December 14, 2006, Senate Permanent
Subcommittee on Investigations, Exhibit 72.
12. David Viniar, email to Tom Montag, December 15, 2006, Senate Permanent Subcommittee on In-
vestigations, Exhibit 3.
13. Stacy Bash-Polley, email to Michael Swenson and others, December 20, 2006, Senate Permanent
Subcommittee on Investigations, Exhibit 151.